Correlation Between Disney and IShares Consumer
Can any of the company-specific risk be diversified away by investing in both Disney and IShares Consumer at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Disney and IShares Consumer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walt Disney and iShares Consumer Staples, you can compare the effects of market volatilities on Disney and IShares Consumer and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Disney with a short position of IShares Consumer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disney and IShares Consumer.
Diversification Opportunities for Disney and IShares Consumer
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Disney and IShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and iShares Consumer Staples in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Consumer Staples and Disney is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Walt Disney are associated (or correlated) with IShares Consumer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Consumer Staples has no effect on the direction of Disney i.e., Disney and IShares Consumer go up and down completely randomly.
Pair Corralation between Disney and IShares Consumer
Considering the 90-day investment horizon Walt Disney is expected to generate 2.49 times more return on investment than IShares Consumer. However, Disney is 2.49 times more volatile than iShares Consumer Staples. It trades about 0.05 of its potential returns per unit of risk. iShares Consumer Staples is currently generating about 0.04 per unit of risk. If you would invest 9,029 in Walt Disney on August 27, 2024 and sell it today you would earn a total of 2,536 from holding Walt Disney or generate 28.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walt Disney vs. iShares Consumer Staples
Performance |
| Timeline |
| Walt Disney |
| iShares Consumer Staples |
Disney and IShares Consumer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Disney and IShares Consumer
The main advantage of trading using opposite Disney and IShares Consumer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney position performs unexpectedly, IShares Consumer can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Consumer will offset losses from the drop in IShares Consumer's long position.| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
| IShares Consumer vs. Vanguard Consumer Discretionary | IShares Consumer vs. Vanguard Utilities Index | IShares Consumer vs. Vanguard Industrials Index | IShares Consumer vs. Vanguard Materials Index |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |